Santa Cruz County Fair Auditor Presentation
Agricultural Association Santa Cruz County Fair auditor presentation by Patricia Kaufman, partner at McGilloway, Ray, Brown & Kaufman Accountants & Consultants. The presentation includes audited financial statements, audit opinions, and analyses of financial positions and changes. Detailed insights into assets, liabilities, net positions, and revenue streams are provided.
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Presentation Transcript
14THDISTRICT AGRICULTURAL ASSOCIATION SANTA CRUZ COUNTY FAIR AUDITOR PRESENTATION PRESENTED BY PATRICIA KAUFMAN, PARTNER MCGILLOWAY, RAY, BROWN & KAUFMAN ACCOUNTANTS & CONSULTANTS
Reports Issued oAudited Financial Statements financial audit for the year ended December 31, 2018 oCommunication with those Charged with Governance oManagement Letter MCGILLOWAY, RAY, BROWN & KAUFMAN 2
Audited Financial Statements Audit Opinion Independent Auditor s Report on Financial Statements (qualified) (Page 1) Basic Financial Statements Statement of Net Position (Page 4) Statement of Revenues, Expenses and Changes in Net Position (Page 5) Statement of Cash Flows (Page 6) Notes to Financial Statements (Pages 7-20) MCGILLOWAY, RAY, BROWN & KAUFMAN 3
Statement of Net Position Reviewed 2017 366,573 $ 1,979,355 276,410 2018 422,634 $ 2,287,455 234,298 Change 56,061 $ 308,100 (42,112) Current assets Capital assets, net Deferred outflows of resources Total assets and deferred outflows 2,944,387 $ 2,622,338 $ 322,049 $ $ Current liabilities Long-term liabilities Net pension liability Deferred inflows of resources $ 123,597 $ 118,079 5,518 721,733 28,957 773,001 7,214 (51,268) 21,743 Total liabilities and deferred inflows 874,287 898,294 (24,007) Net Position Net investment in capital assets Restricted for junior livestock auction Unrestricted 2,287,455 23,296 (240,651) 1,979,355 (270,297) 308,100 29,646 346,056 14,986 8,310 Total net position Total liabilities, deferred inflows of resources, and net position 2,070,100 1,724,044 2,944,387 $ 2,622,338 $ 322,049 $ Current assets - Increased 15% due to increase in current year income and cash. Capital assets, net - Increased 16% due to increase in donated assets from Heritage Foundation. Deferred outflows of resources - Varies yearly based on contributions to pension. MCGILLOWAY, RAY, BROWN & KAUFMAN 4
Statement of Revenues, Expenses, and Changes in Net Position Reviewed 2017 2,076,373 $ 2,258,398 2018 2,609,726 $ 2,301,860 Change 533,353 $ 43,462 Operating revenues Operating expenses Income (loss) from operations Non-operating revenues Intergovernmental 307,866 (182,025) 489,891 38,190 38,190 - Change in net position Net position - beginning of year 346,056 1,724,044 2,070,100 $ (143,835) 1,867,879 1,724,044 $ 489,891 (143,835) 346,056 $ Net position - end of year Operating revenues - Increase of 26% a result of increase across all operating revenues, including increase to admissions, rental income, food concessions and parking fees. MCGILLOWAY, RAY, BROWN & KAUFMAN 5
Communication with those Charged with Governance Significant Audit Findings Management is responsible for the selection and use of appropriate accounting policies we noted no transactions entered into by the DAA during the year for which there is lack of authoritative guidance or consensus. Accounting estimates We evaluated the underlying assumptions for useful lives of capital assets, deferred inflows and outflows of resources and accrued compensation, and found them to be appropriate. All significant transactions have been recognized in the financial statements in the proper period Sensitive Financial Statement Disclosures The disclosure of Pension Plan in Note 6 CalPERS GASB Statement No. 68, Accounting Valuation Report, with the measurement date of June 30, 2018. The disclosure of COVID-19 in Note 9 Management performed an evaluation on the effects of the recent coronavirus outbreak and determined that operations have been substantially impacted. Difficulties Encountered in Performing the Audit None Corrected and Uncorrected Misstatements Management has corrected all misstatements. Disagreements with Management None Management Consultations with Other Independent Accountants None Other Matters Required supplementary information Management has omitted the MD&A. Limited assurance on Schedule of Proportionate Share of the Plan s Net Pension Liability. MCGILLOWAY, RAY, BROWN & KAUFMAN 6
Management Letter Material Deficiency 2018-01 Santa Cruz County Fair 2018-01a Gate Ticketing: Deficiency: During our observation of the 2018 Santa Cruz County Fair held on September 12- 16, 2018, we noted tickets at ticket gates were printing the wrong date. Staff members responsible to collect tickets were not aware that tickets from ticket booth were printing the incorrect date. With exception for the Livestock gate, we believe that gate employees were not reviewing ticket dates. Additionally, handicap vehicles were not consistently charged a fee to park in the main parking lot or for valet parking. Effect: Increases the possibility of understatement of revenues and cash, due to fraud. Recommendation: We recommend the DAA review the ticketing procedures and update, as needed, to correspond with the procedures assigned to the ticketing and gate employees during the annual festival. MCGILLOWAY, RAY, BROWN & KAUFMAN 7
Management Letter Material Deficiency, Continued 2018-01 Santa Cruz County Fair 2018-01b Security of Assets Repeat finding (12/31/2015) Deficiency: During our observation of the 2018 Santa Cruz County Fair held on September 12- 16, 2018, we noted that cash was not properly secured at all times at the ticket gates. Large amounts of cash were noted being held out in the open. Further, cash at main parking lot and valet parking was kept in an open box. Effect: Lack of physical security of business assets and resources could result in loss or damage of unsecured assets and resources. Cash in an open box is a risk if all three parking attendants are busy parking cars. Recommendation: We recommend that cash be kept out of sight and secured. Additionally, cash on hand should be restricted to a small amount to avoid large amounts of misappropriation or loss. MCGILLOWAY, RAY, BROWN & KAUFMAN 8
Management Letter Material Deficiency, Continued 2018-02 Subsequent Internal Account Transfer Accrued as of Year End Deficiency: During our audit procedures, we noted a check written after year end for an internal transfer between accounts was accrued as of December 31, 2018. This error was not detected by current internal controls. Effect: Backdating checks could result in misstatements of cash and lead to discrepancies with accounting records and reconciliations. Recommendation: We recommend all check disbursements be dated in sequence using the date the check was produced. We also recommend reconciliation of the bank accounts be reviewed for any unusual items, such as out of sequence checks, investigate and fully resolve any such items. MCGILLOWAY, RAY, BROWN & KAUFMAN 9
Management Letter Best Practices BP 2018-03 Fairgrounds Security Observation: During our observation of the 2018 Santa Cruz County Fair held on September 12-16, 2018, we noted that security was not checking bags, pockets, or using a metal detecting wand at the gate between the Main Office and Heritage Hall. Recommendation: As a best practice, we recommend the DAA review the security procedures and update as needed to correspond with the procedures assigned to gate employees during the annual festival. MCGILLOWAY, RAY, BROWN & KAUFMAN 10
Management Letter Best Practices, Continued BP 2018-04 Payroll Procedures Observation: During our audit procedures, we noted that management does not provide visible evidence for management s review of timesheets. We believe that controls would be strengthened if the following recommendation was implemented. Recommendation: As a best practice, we recommend the DAA update its payroll procedures to include management s initial and date of review for timecards and payroll check batches. MCGILLOWAY, RAY, BROWN & KAUFMAN 11
Thank you MCGILLOWAY, RAY, BROWN & KAUFMAN 12
